Tasly Pharmaceutical Group (600535.CH): Steady recovery of the result in 1H17 August 23, 2017

Investment summary

Tasly’s pharmaceutical manufacturing sector has recovered steadily with its pharmaceutical commerce business growing faster. Plus the adjustment of channels, the trading volume of the second-line potential varieties and the heated class I new drugs such as rhPro-UK will explode hopefully after entering the NDRL. The result of the Company will return to the upward trend. Moreover, as a leader in modern traditional Chinese medicine industry, the internationalization of Compound Danshen Dripping Pills will also have a positive influence. The Company’s brand influence will be significantly improved. In light of comparable companies, we give Tasly an estimation of 35x PE in 2017 and a 12-month target price of RMB43.8, with the “Accumulate” rating maintained. (Closing price at 21 Aug 2017)